The realities of an “embattled Trump administration” have not come to pass in the latest business and consumer confidence data, says Kames Capital’s Scott Jamieson.
In fact, the US Beige Book, which measures sentiment based off a compendium of surveys from 12 regional banks on local activity, “has shown more resilience than might have been expected,” he remarked.
“Although sentiment could easily have taken a knock, there is no evidence yet of any downtick in either the manufacturing or non-manufacturing surveys.”
Findings from the Beige Book also pointed to increased retail sales, growth in the energy sector and stable home prices, leading Jamieson to conclude the US economy “may not be firing on all cylinders but is warming up nicely.”
“If companies start to act with the confidence they say they feel then the next report should be bound in a much more vibrant colour,” he said.
Money flows in
Based on Morningstar’s global assets flow data for 2016, the US equities boon could create an even starker contrast between flows into US equities and equities globally, he believes.
New flows into US products increased from $260bn (£213bn) to $288bn between 2015 and 2016, while European flows dropped from $184bn to $103bn over the same period. Asian flows were also weaker year-on-year, sinking to $134bn from $190bn.
One of the main reasons for this disparity was the huge inflow garnered by the US passives industry last year.
Vanguard continued to dominate competitors like BlackRock and Fidelity by a wide margin, wrangling net inflows of $317bn during the year. By contrast, BlackRock/iShares saw just $154bn in net inflows.
In total, US index funds attracted $492bn, offsetting $204bn in redemptions suffered by their active counterparts in America.
